The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Aviation operators yesterday described fees as “a dirty word” after Nassau’s main gateway unveiled plans to create equality between commercial and private plane passengers by levying a $28 charge on the latter.

Anthony Hamilton, Southern Air’s director of administration, and president of the Bahamas Association of Air Transport Operators, told Tribune Business that it was “not a good time” for the Nassau Airport Development Company (NAD) to be eyeing fee increases given that the aviation and tourism sectors - as well as the wider economy - are battling to recover from the COVID-19 pandemic.

“There’s an ongoing discussion right now regarding fees,” he explained. “Fees are a dirty word in the industry. You’re battling right now with revenue, and the margins are very thin. It’s not a good time.” However, Mr Hamilton and both international and Bahamian airlines will not be impacted by the latest fee, which is targeted only at passengers on general aviation or private planes arriving from international destinations.

The Lynden Pindling International Airport (LPIA) operator, unveiling its plans in a public consultation document, said the so-called “airport improvement fee” would be used to help finance some $30m worth of “airside infrastructure” upgrades required at the airport.

It added that the charge would bring more equality, with all private plane passengers now contributing more to LPIA’s upkeep like their commercial airline counterparts, while arguing that the fee - which is inclusive of VAT - was competitive, and in many cases lower, than what was levied at rival US and Caribbean airports.

“NAD proposes to implement an airport improvement fee (AIF) for all passengers arriving via general aviation flights to the Lynden Pindling International Airport,” NAD said. “General aviation passengers, unlike commercial passengers, currently pay no direct airport improvement fees to NAD for their use of the airport.

“The fee will be $28 (VAT inclusive) for passengers arriving to Nassau via private aircraft from international destinations. The new fee is consistent with NAD’s agreement to manage LPIA and determine fees and charges.”

NAD added: “LPIA typically has a mix of both commercial traffic (approximately 60 percent of landings) and general aviation or private aircraft traffic (approximately 40 percent of landings) operating from the airport.

“Notwithstanding the significant percentage of general aviation landings, revenue attributable to all general aviation operations at the airport accounted for an average of only 11 percent of total aeronautical revenue respectively in financial year 2018, 2019 and 2020 (excluding NAD’s passenger facilities charge).

“General aviation’s average contribution inclusive of the passenger facility charge was 3.29 percent for financial year 2018, 2019 and 2020,” the airport operator added. “The majority of aeronautical revenue comes from commercial passenger fees (61 percent) and commercial landing fees (24 percent).

“Presently, no passenger fees are assessed to general aviation (non-commercial) passengers. Passenger fees typically go toward capital and other airport improvements and to support the airport’s debt service obligations. 

“With the implementation of a general aviation airport improvement fee, general aviation operations will begin to contribute a fairer share of the revenue required for the capital improvements, maintenance and debt servicing of the airport.”

Basing its fee benchmarking exercise on a 10-seat Piper Aztec Navajo PA31, which it said is a common visitor to most airports, NAD said: “LPIA has charges comparable to two New York area airports, but US airports generally have low landing fees, in part due to subsidisation from the FAA’s Airport Improvement Programme and some state programmes. LPIA receives no subsidisation from the Government.”

Turning to how the fee income generated will be used, NAD added: “The proposed AIF fee will be used to assist the funding of planned investments at the airport. At this time, it is anticipated that some $30mwill need to be invested in airside infrastructure improvements inclusive of pavement surfaces and lighting among other needs.

“Asphalt has a life of 20 years and as such fees implemented should cover these capital costs in part over that period. The increase in general aviation revenues is meant to fund needed major construction projects to better serve general aviation passengers and reduce their delay impact on commercial flights and passengers.”

The airport operator continues: “Management continues to take steps to meet NAD’s operating and required capital expenditure programmes, fund debt service requirements and comply with financial covenants as The Bahamas recovers from the current pandemic.

“The new fee allows general aviation to contribute more fairly towards NAD’s maintenance of a strong financial position. Further, the fee will help NAD meet its debt service and financial covenant obligations, and for NAD to fund important regulatory, security, maintenance and capital projects to ensure efficient and safe airport operations.”

NAD is aiming to implement the new fee on February 1, 2022, once it is approved by the Airport Authority and gone through consultation with all relevant stakeholders.